Intellectual property law is good. Excess in intellectual property law is not. This blog is about excess in Canadian and international copyright law, trademarks law and patent law. I practice IP law with Macera & Jarzyna, LLP in Ottawa, Canada. I've also been in government and academe. My views are purely personal and don't necessarily reflect those of my firm or any of its clients. Nothing on this blog should be taken as legal advice.

Tuesday, June 17, 2014

Copyright Trolling in a Perfect Storm of Connected Canadian Legal Dots? From Teksavvy to Bill S-4

(Wikimedia)

Today’s
announcement that the ‘Notice and Notice” provisions of the Copyright Modernization Act
(“Bill C-11) will come into effect on January 1, 2015 without accompanying
regulations is the latest in a series of dots that, even if not meant to be
connected, are very likely to be connected by those who stand to benefit from
such connection. This could all lead to a perfect storm of mass threats of copyright
litigation and actual copyright trolling activity – with lots of Canadian dolphins
(e.g. ordinary people doing ordinary things) getting caught in the “net”, so to
speak. So – let’s look at these dots and how they may be or get to be
connected:

The
Voltage Pictures disclosure order from Federal Court dated February 20, 2014 opened the door for Voltage to get
subscriber details from 2,000 or so Teksavvy customers. Teksavvy was criticized
only by a few, including me, for apparently doing little other than buying time
for a law school clinic to stand in for the public interest and looking out to
cover its supposedly significant costs related to the eventual disclosure.

In
the result, the door was opened and conditions were imposed and everyone
declared victory. However, the fact is that, unlike in 2004, the disclosure order
was granted and the issue of inadequate, hearsay evidence was not even mentioned
by the Court. That could be because the motion was not argued mainly on the
basis of lack of sufficient, reliable non-hearsay evidence. Indeed, in the
result there was no mention of hearsay in the ruling, perhaps because it had barely
been mentioned in the oral argument, according to the unofficial transcript,
and then only by Voltage. I should disclose my involvement in the 2004 litigation,
which achieved a very different result in the form a victory for the public
interest mainly because the record companies were unable or unwilling to come to
Court with adequate, reliable and non-hearsay evidence as required by the Court
at the time. This time, it appears that all concerned focussed, for whatever
reasons, on issues other than the rules of evidence. Monday morning quarter
backing several months after the fact is admittedly easy to do. But I was onto
this issue at the time and, arguably, one should take victories where they come
and a victory in this case based on the quality and hearsay
nature of the evidence arguably seemed quite achievable.

Even
though there were potential difficulties for all concerned arising out of the
Court’s Voltage & Teksavvy order, everyone proclaimed victory.

Bill
S-4 – which would apparently allow copyright claimants and others to seek
“voluntary” disclosure of private info from ISPs was introduced in the Senate on
March 8, 2014, just a couple of weeks after the Teksavvy ruling. The lack of
general concern with the retreat from the strict requirement for adequate
non-hearsay evidence and the lack of apparent concern with Voltage’s success in
the Voltage/Teksavvy ruling - indeed the proclamation of victory by some who arguably
could and should have been upset by the result - may have encouraged and empowered
the Government to proceed with this voluntary disclosure legislation.

Almost
immediately, a few days later, on March 11, 2014 Rightscorp – which pursues
mass enforcement via ISPs – announced it is moving into Canada and had retained
a major Canadian law firm and prominent lawyer to engage in pursuing illegal downloaders.
The press release indeed trumpeted the recent Teksavvy
decision: “"Recently in a Canadian Federal
Court decision, an Internet service provider (ISP) was ordered to hand over
2,000 names of customers that allegedly violated copyrighted works by illegally
downloading movies."

Meanwhile,
Voltage is pursuing it disclosure efforts and Teksavvy’s its costs recovery for
legal and admin costs in Federal Court – with a very busy docket in T-2058-12
. There’s clearly a lot of money potentially on the table in this case alone,
not to mention what may follow as suggested below.

On
Friday, June 13, 2014 SCC delivered the R. v. Spencer decision,
which clearly raises serious questions about the constitutional viability of the
voluntary disclosure provisions of Bill S-4.

Notwithstanding
the Spencer decision, Bill S-4 was passed by the Senate without amendments on Monday, June
16, 2014. It will now be considered by the House of Commons ("the other place").

The
Government announced today June 17, 2014 that the “Notice and Notice”
provisions of C-11 will take effect January 1, 2015 – without regulations –
which means that ISPs cannot charge for sending out the Notices that they will
be obliged to send, since there are no regulations in place. See s. 41.26(2) of
the Copyright
Act. Without regulations, and an oversight mechanism, what would
prevent the insertion of “settlement demands” in these Notices? But even such
insertion of “settlement demands” may not be necessary.

If
Bill S-4 becomes law as is, it will allow for the voluntary disclosure of subscriber
information, with no court order or scrutiny and with impunity for an ISP, where
an alleged rights holder seeks such information because it alleges that a
contravention of the Copyright Act “has been, is being or
is about to be committed”. This would take any remaining pressure from privacy
advocates, however minimal it may be, off the Teksavvys’ of Canada to resist
disclosure – or even to go through the motions. As disappointed as some may be
with Teksavvy in the circumstances, it must be said that Bell and Rogers have
never resisted any disclosure motion as far as I know and Videotron has actively
cooperated in the past.

Indeed,
if this law is passed and not successfully challenged (and who would mount the
challenge?), will potential trolling entities be able to cut deals with ISPs
for “voluntary disclosure” of the names and address of alleged illegal
downloaders based upon IP addresses? For example, could a copyright owner or its representative simply ask for “voluntary
disclosure” of the names, addresses, phone numbers and activity relating to a
certain film by any customers of that ISP?

If
this turns out to be the case, the rights holders could then “monetize” their
copyright rights and the ISPs could “monetize” their subscribers’ privacy. All of
this would be with legislative sanction, approval and immunity from class actions and
PIPEDA remedies. This could potentially be lucrative for all concerned – even
with a potential $5,000 cap on damages for non-commercial activity. A few
thousand bucks here and few thousand bucks there from thousands of Canadians
pretty soon would add up to some real money.

So
– will various rights holders – or those acting for them – try to take
advantage of what is shaping up to be a potentially perfect climate for the
perfect storm to chase “illegal” downloaders and get a quite a lot of money by
automated processes? Could Canada turn into a troll or mass litigation haven?
It should always be recalled that “troll” and even sometimes even apparently
legitimate mass litigation or monetization activity invariably catches many
innocent victims and can impose disproportionate penalties on virtually all
targets because it is simply more economical to pay than to fight. We have seen
this turn truly ugly in other jurisdictions when unscrupulous lawyers chase
after alleged downloaders of pornography and the stakes go way beyond the
merely economic and the exercise begins
to resemble mass extortion.

With
the notorious lack of competition in the ISP business, and with a possible
scenario in which ISPs could “voluntarily” provide subscribers’’ private
information to trolls, bleak scenarios can be imagined. The Courts can only
intervene if asked and if the litigation is vigorously and competently pursued
by one or more parties determined to win.

This bleak future may not be what is intended by the Government – but perfect
storms, tsunamis, and other such unfortunate events are never intended. If this
one materializes as feared (I hope I am wrong), the architects are certainly extremely clever tacticians.

This
outcome, however, can still be prevented. Bill S-4 can be fixed in "the other place". A very wise law professor of mine
named Harry Glasbeek said that any new statute or Supreme Court decision should
be judged in light of the worst, most absurd and unintended consequence that
could ever possibly result – because one can be sure that it will happen and
sooner rather than later.